AOL make $850m mistake!

In 2008, the couple that set up the social networking site Bebo, sold out to AOL for $850m. Not bad for a few years work! It was an eye watering figure at the time, but this seems a lot worse, now that AOL have decided to cut their losses and close it. Bebo is popular among the youth, but none of these social networking sites, have so far shown, any great propensity to make money. Facebook has roughly 400m users worldwide, but barely breaks even. So what chance did Bebo have? Bebo is yet another example of how big media conglomerates jump on the Web 2.0 bandwagon with disastrous consequences. They try and jump on the wave of social media and get it horribly wrong. I am just glad I am not a shareholder of AOL…or come to think of it ITV…they lost £145m on Friends Reunited. NewsCorp shelled out megabucks for MySpace…that does not look like a master stroke either at this stage. So what is the answer..the acquisition of young companies by large “old-world” players never seems to work..perhaps the model to follow is Google’s. They listed on the stock market through an IPO, and continue to make money for shareholders. And, possibly most significantly of all, they still get to control their destiny…